It’s dangerous to predict the future of a prospective leader based solely on past performance. Quick personality profile-style assessments are equally as risky. Paolo Moscuzza discusses the critical elements that are often overlooked when assessing future leaders, and why a multi-dimensional approach is a must to ensure the right candidate is selected.
Sales are down, profits are down and future business/orders don’t look good. It’s a common predicament for many firms right now. One way out is through a leadership shake-up or change. That was the case for the business in the following scenario.
An international professional services firm needed a new senior director, capable of steering the firm through the current difficult climate by finding new commercial opportunities and new clients. The new director needed to challenge the management of the current operation – e.g. slow speed of delivery and reliance on old and tired solutions. The role required someone who wasn’t afraid to generate healthy conflict by asking the right, yet sometimes, provocative questions at the right time, in the right manner to improve results. Although there were several internal prospects, the board was not confident they had identified the best candidate to lead the company. The traditional one-dimensional methods of assessing candidates, based on past performance and personality profiles had failed them, so they sought external guidance. When ER Consultants came on board, we discovered that instead of looking for the candidate with the right skills for that particular time, this board had made the common mistake of taking scores from assessments such as personality profiles, and using the scores in a trump card fashion to recruit their future leaders.
Top trumps
I have serious concerns about uni-dimensional assessments, like 40-minute personality profiles and historical assessments, especially where the scores of prospective candidates are used in a Top Trump card manner to measure one against another. For those of you not familiar with the trump card game, each card represents a character with six attributes. The player whose turn it is looks at his top card, then chooses one attribute to compare, the other players check the score of that attribute on their character cards, and the one with the highest score wins. In much the same way, it’s not uncommon for boards to come up with measurements for candidates, such as: Intelligence 97%; Communication Skills 89%; Networking skills 45%; Market knowledge 77%, for candidates, and use them like Top Trumps. Although the data is important and meaningful, it’s not a perfect selection formula, and can sometimes end up in expensive and painful hiring mistakes – something that the organisation in question wanted to avoid.
Why? A completely unsuitable person may score highest on Top Trumps overall, but the downside of a single weak attribute may be disastrous. Conversely, the individual may have three exceptional scores and two lower ones, but is superb at compensating for his/her weaknesses. If we are too busy playing Top Trumps we may easily ignore what the role of the director is all about – which is adding maximum value to an organisation, where value is multi-dimensional, multi-perspective and both tangible and intangible.
Another factor that is too often ignored is the ‘point in time’. It may be point in time in the individual’s life, the organisation’s life, the internal context, the external context, technology, etc. Such factors, although awkward to discuss, are critical in the selection process.
There is also the issue of interpreting the results. An individual can legitimately be described as ‘excellent and dreadful’; ‘a genius and an idiot’; ‘a visionary and clueless’. For example, the CEO of an organisation I recently worked with was described by some as ‘completely detached from reality, wrecking the fabric of the organisation, does not value people.’ However, he was also described by others as someone who had ‘transformed the organisation so that it stands a chance of survival, tough, but honest and people know exactly what is expected from them now.’ Therefore, the ‘right attributes’ really depend on your perspective/personal preference – P&L, customer satisfaction, innovation, friendly person, etc. The challenge of recruiting senior leaders based on past performance is that their results will be described in different ways depending on what perspective/angle you take.
Apart from the interpretation issue, past performance may be both a reliable and unreliable predictor of the future. One method that has become popular in recent years is using historical models to select their future leaders, much in the same way as shares are selected. As we have seen in the last 18 months, selecting shares on past performance can be disastrous. The current performance of a share is no guarantee of future performance, and a sales pitch for future performance may sound good, but lack any substance.
Hardly surprising then, that these methods did not work for the client in the above scenario. Their highest performing maverick, also much loved by his clients, had come up trumps through the uni-dimensional approach, but it failed to acknowledge that his big ego had some ‘hard to manage’ side effects. With our guidance, the board realised its biggest challenge was to stop discussing the level of negative aspects they would tolerate, and change their focus to finding a senior director who could rock the boat. From this point the discussion moved on from ‘what does a good director look like to me?’ to ‘what should a director do to deliver shareholder value in the next phase of our growth’, and equally importantly ‘not do.’
Selection criteria key
As in this case, it is very common for organisations to focus on what they want and ignore what they don’t want. A good example is someone who does all the right things and can evidence them well, e.g. great at building new relationships. However, s/he also regularly does the wrong things e.g. wreck important relationships. The key is knowing both what you want and what you don’t want. People are complex and may possess attributes or characteristics that are contradictory – hence simplistic formulas are dangerous and selecting the attributes you are looking for and what you are not looking for is the first key step.
Once you have agreed the selection criteria, the next step is to identify effective ways of assessing the individuals and finding an appropriate way of measuring their attributes. There are a lot of companies peddling the best tool/approach/profile with statistics that partially make sense to support them. In our experience, a multi-dimensional approach – that takes into account the past, present and future – is essential.
Past: You cannot ignore the past because it has happened and it will give you useful insights. However, even a factually accurate account of ‘what’ an individual did in the past may tell you little about ‘how’ he/she did it. Furthermore, the interpretation of past events, such as business failures, are quite different depending on which part of the world you are based.
Present: Personality profiles provide a way in, but it’s only when you combine the present profile with the past events that it become more meaningful. However, validation does not mean just finding evidence to support successful actions. It’s when they did not do something, why they did not do it and the impact of that, that’s often more meaningful.
Future: Some recruiters love the future ‘how would you…?’ questions. I have my reservations on how useful it is to ask someone how would they resolve a general issue (e.g. drop in performance) in an interview. By contrast solving a concrete problem under time pressure may be much closer to the role and provide more meaningful information, especially if it is accompanied by real time challenging issues relevant for the role.
In our experience, assessments alone don’t have all the answers and often, tell you more about who to select out, than who to select in. It is not just about finding those that achieve top scores. A multi-dimensional approach will help to reveal other things, for example, a leader who is set in the old organisation’s ways and not open to challenge, creating potentially unhealthy conflict with the board. It can also help to uncover those executives prepared to be developed and open to being coached on how to work constructively with NEDs for long-term success (see NEDs: Stand Up to the CEO).
Therefore a multi-dimensional approach to assessing leaders is important if you are to find the right person for the leadership role in question. That’s what we did for the client mentioned at the beginning of this article. Not only did we help them figure out what attributes their new director would need to have to achieve current and future goals, but we also carried out a series of multi-dimensional assessment, through interviews, profile testing and business simulations. This approach probed far deeper to find the right candidate to fulfill the company’s needs and provide that strong leadership they were looking for.
This multi-dimensional approach is a proven methodology that ER Consultants uses alongside headhunters like Odgers (see page 5) and directly for FTSE 100 companies. We have also very recently carried out such assessments with boards of companies in pre-acquisition stages to figure out whether an acquisition/merger should go ahead with much success (see case study below).
For more information, contact: Paolo.Moscuzza@erconsultants.co.uk
Case Study: Acquiring the Best
In early 2009, ER Consultants was asked to carry out as assessment of a board pre-acquistion for a successful retailer who wanted to acquire a subsidiary firm of a retailer, which was in administration. It was an unusual position because despite being in administration, the management team of the successful subsidiary of the flailing retailer was in a position where they had a say in which company they wanted to join. The acquiring organisation wanted the assessment because it believed it would differentiate them from the competition, as well as inform whether they should acquire it, and how to run it if they did.
ER Consultants developed a competency framework and series of assessments that reflected the approach and ability of the acquired team to run the business in a way that worked for the new owner. Each member of the management team was individually and collectively assessed. This also allowed us to provide an insight into the different personalities and leadership styles, which helped the understanding of how they could best work together moving forward. We analysed this in the context of the reporting lines into the acquiring company. A combination of the management team due diligence, together with a culture audit provided the acquiring retailer with excellent information about the company they were acquiring. The subsidiary being acquired appreciated the interest in them was beyond the usual ‘What do the numbers look like’, and became convinced this was the right partner for them. It reassured the acquiring company that the leaders already in place were still the right leaders to take the subsidiary forward and how to work best with them.
The information we gathered helped to secure the deal and ensure the reporting structure, approach and changes were managed in a way that both companies gained from the relationship, proving that it was a marriage, and a meeting of minds rather than a take-over. To date the subsidiary is performing ahead of target where the relationship with the new parent company is an open one, with regular and effective dialogue.
